Pearse to Diagnose B.C. Coastal Forest Industry

Peter Pearse has been asked by the B.C. government to diagnose the province’s ailing West Coast forest sector.

Vancouver Sun, Page C10, 25-Sep-2001

“Coast forest prober Pearse decries gov’t ‘tinkering’

Gordon Hamilton

The man hired a week ago by the provincial government to examine the problems of the coastal forest industry said Monday he intends to take a hard look at some sacred cows. Peter Pearse, the author of a 1976 Royal Commission report that led to the establishment of much of the existing system of allocating timber in B.C., said Victoria’s “tinkering” with rules and regulations over the years is one of the causes for the precipitous decline in coastal logging and lumber manufacturing.

“I am going to be looking very closely at those regulations that make it difficult to create an efficient industry here,” Pearse said. He was in Victoria to complete the terms of his appointment with the ministry of forests.

A resource economist, Pearse has been asked by the ministry to analyse the economic state of the coastal industry and diagnose problems. He said he expects to find government policies are as much at the root of the coast’s problems as are market issues. Stressing that he is “thinking out loud right now,” Pearse said there is much government can do to help turn things around. Regulations he sees as flawed include:

Log-export restrictions, a long-standing policy aimed at keeping jobs in B.C. that is enforced by both federal and provincial governments.

Regulations that tie timber supplies to local manufacturing facilities with the purpose of creating community stability.

The tenure system that allocates long-term timber rights to forest companies without putting them up for competitive bidding.

A stumpage system that is not based on market prices for logs.

Tenure and stumpage reform are linked. To establish a market-based stumpage system many in the industry believe about 50 per cent of the coastal harvest would have to be sold on the open market. To achieve that volume, licensees would have to give up some of their tenure rights.

The over-all result is likely to be a much smaller coastal industry but one that is less fettered by regulations, Pearse said.

Pearse’s appointment is the first indication that the provincial government is moving on its promise to develop new provincial forest policies but deputy forests minister Don Wright said Pearse has not been asked to make recommendations, only review the problems. He referred to the review as “stage one” of the Liberal government’s approach to addressing coastal forestry problems.

“We have asked him to do diagnosis, not prescription,” Wright said.

Before any far-reaching changes are considered, the government would seek broader discussion from more stakeholders, he said. “In terms of some of the more fundamental reforms, we believe a more deliberative approach needs to be taken.” Pearse said he believes the very life of the coastal industry is threatened by changes in international markets coupled with high operating costs here. The Coast Forest & Lumber Association, which represents logging companies and sawmills operating on the B.C. coast, reports more than 10,000 workers are now idle.

Association president Brian Zak said that while the 19.73-per-cent softwood lumber tariff imposed last month by the United States is a factor in the layoffs, it was only one more of “a thousand lashes” that have broken the industry’s back.

“We have been doing a slow death and it hasn’t been on anybody’s radar screen,” Zak said. “Our companies have lost $715 million in the last five years alone. If this continues we are not going to be a contributor to the provincial economy period, through either stumpage payments to the government or income taxes paid by our employees.”